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The financial crisis that still plagues the world has taught that banks deemed too big to fail may also be too big and complex to manage efficiently. Consider the London office of JPMorgan Chase that ran up a $6 billion loss when no one at headquarters was watching closely or enforcing its own rules.

Something similar may apply to China. Its huge economy won’t fail even though it clearly is slowing down to an unknown pace. But as Chinese society becomes more modern, complicated and troubled, Beijing’s leaders are finding it increasingly difficult to govern effectively—at least by the ruling system they have in place. Despite insistent warnings from inside the country that failure to reform may lead to a national crisis, so far they resist making needed...